ASSET
      PURCHASE AGREEMENT

    


    This
      ASSET PURCHASE AGREEMENT (the “Agreement”) is made July 8, 2008 (the “Effective
      Date”) by and between CHARLES HILL DRILLING, INC. (“Buyer”) and SEQUOIA FOSSIL
      FUELS, INC. (“Seller”). Buyer and Seller may be referred to herein individually
      as “Party” or collectively as “Parties”. 

    


    RECITALS

    


    WHEREAS,
      Buyer
      desires to purchase all of Seller’s right, title and interest in the assets (the
“Assets”) listed in Annex A of this Agreement from Seller, and Seller desires to
      sell all of its right, title and interest in the Assets to Buyer; 

    


    NOW,
      THEREFORE,
      based
      on the above and in consideration of the covenants and agreements contained
      herein, the receipt and sufficiency of which are hereby acknowledged, the
      Parties agree as follows: 

    


    1.
      Purchase and Sale.

    


    1.1
      Purchase and Sale; Consideration. In consideration for the payment of
      $1,500,000 in cash, Seller hereby agrees to sell, transfer and relinquish all
      of
      Seller’s right, title and interest in the Assets to Buyer. Except as otherwise
      agreed by the Parties, title and risk of loss to Assets will transfer to the
      Buyer upon the physical delivery of the Assets by Seller. 

    


    2.
      Representations and Warranties

    


    2.1
      Each Party. Each Party represents to the other Party that: 

    


    (a)
      Authority. They each have the authority to enter into this Agreement in
      the name, title and capacity herein stated with full and lawful authority on
      behalf of their respective principals including a current authorization by
      their
      respective boards of directors, managers or trustees approving the execution
      and
      delivery of this Agreement; 

    


    (b)
No
      Default. Neither the execution and delivery of this Agreement, nor the
      consummation of the transactions contemplated hereby, nor the compliance with
      the terms hereof, will result in any default under any agreement or instrument
      to which a Party is a party, or violate any order, writ, injunction, decree,
      statute, rule or regulation applicable to a Party; 

    


    (c)
No
      Action. No order has been entered, or remains in effect at the Effective
      Date, in any court or governmental agency having jurisdiction over the Parties
      or the subject matter of this Agreement that restrains or prohibits the purchase
      and sale contemplated herein, and no order has been entered, or remains in
      effect at the Effective Date which seeks to recover damages from any of the
      Parties resulting therefrom; and 

    


    (d)
      Enforceability. This Agreement constitutes the legal, valid and binding
      obligation of each Party, enforceable in accordance with its terms, except
      as
      limited by bankruptcy or other laws applicable generally to creditor's rights
      and as limited by general equitable principles. 


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    2.2
      Conditions of Assets. Purchaser understands that the Assets are being
      purchased in an “as is” condition. Unless otherwise prohibited by law, Purchaser
      agrees that Seller (i) makes no warranties, expressed or implied, except that
      Seller warrants that Seller has good and marketable titles to the Assets and
      the
      Assets will be delivered free and clear of all liens; (ii) Purchaser waives
      as
      to Seller all warranties, whether of merchantability, fitness or otherwise;
      (iii) Seller disclaims all legal responsibility for product defects that might
      cause harm; (iv) Seller shall not be liable for any general, consequential
      or
      incidental damages, including without limitation, any damages for loss of use,
      loss of profits or dimunition of market value, and Seller shall not be liable
      for any damages claimed by Purchaser or any other person or entity upon the
      theories of negligence or strict liability in tort; (v) if the Assets should
      for
      any reason prove to be defective, Seller bears no obligation for the servicing
      and repair of such defect(s); and (vi) all risks as to the quality and
      performance of the Assets is that of Purchaser. 

    


    2.3
      Title to and Condition of Properties. Seller has good and marketable
      title to, is the lawful owner of, and has the full right to sell, convey,
      transfer, assign and deliver the Assets free and clear of any mortgage, lien,
      pledge, security interest, option, lease (or sublease), conditional sales
      agreement, title retention agreement, charge, claim, encumbrances, easement
      or
      encroachment, except as disclosed on Exhibit B hereto. At and as of the Closing,
      Seller will convey the Assets to Purchaser by deeds, bill of sale, certificates
      of title and instruments of assignment and transfer effective to vest in
      Purchaser, and Purchaser will have, good and valid record and marketable title
      to all of the Purchased Assets, free and clear of all encumbrances other than
      those described in this Section. 

    


    2.4
      Breach of Seller's Warranties. From and after the Effective Date, Seller
      agrees to indemnify, defend and hold harmless Purchaser against all losses,
      claims, damages, liabilities and expenses (including reasonable attorneys’ fees)
      incurred in connection with (A) actions taken or omitted to be taken (including
      any untrue statement made or any statement omitted to be made) by the Seller
      or
      any of its officers, directors employees, agents, representatives or their
      respective affiliates with respect to the Assets; and (B) any breach of the
      several representations and warranties of Seller set forth herein. 

    


    3.
      Miscellaneous

    


    3.1
      Term. This Agreement shall continue in effect until the obligations of
      the Parties pursuant to this Agreement have been fully performed, unless the
      context of a particular provision indicates by its context that it should
      survive such termination. The termination of this Agreement shall not relieve
      a
      Party of any expense, liability or other obligation, or any remedy therefor,
      which has accrued or attached prior to the date of such termination.


    


    3.2
      Assignability. This Agreement is personal in nature and may not be
      assigned by a Party or Parties without the prior written consent of the
      non-assigning Party or Parties, which consent shall not be unreasonably
      withheld. Any assignment of this Agreement shall be made specifically subject
      to
      the terms and conditions of this Agreement and any assignee shall agree in
      writing to be bound by the terms of this Agreement. 

    


    3.3
      Successors and Assigns. This Agreement, and all the rights, titles,
      interests, requirements, covenants, obligations, terms and conditions set forth
      herein, shall be binding upon, and inure to the benefit of the Parties hereto
      and their respective partners, parties of interests, beneficiaries, heirs,
      representatives, trustees, and permitted successors and assigns.



    
      
        
        

      

      
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    3.4
      Counterparts. This Agreement may be executed in multiple counterparts, by
      original signature, facsimile, or by electronic copy (the means of such
      electronic copy to be mutually agreed by the Parties), no one of which need
      be
      executed by all the Parties hereto. 

    


    3.5
      Partial Invalidity. The invalidity or unenforceability of any particular
      provision of this Agreement or any of the documents collateral to it will not
      affect the other provisions hereof or thereof, and the Agreement and any of
      the
      documents collateral to it will be construed in all respects as if such invalid
      or unenforceable provisions were omitted. 

    


    3.6
      Notices. Except as otherwise provided above, all notices required under
      this Agreement will be given in writing and delivered in person, by United
      States certified mail return receipt requested, courier service, facsimile,
      telecopy or e-mail addressed to each of the Parties at the addresses listed
      below: 

    


    
      	
              Charles
                Hill Drilling, Inc. 

              c/o
                Knight Energy Corp. 

              909
                Lake Carolyn Parkway, Suite 750 

              Irving,
                TX 75039 

              Attention:
                Bruce A. Hall 

              Telephone:
                (972)-401-1133 

              Telecopy:
                (254) 631-0211 

              Brucearthurhall@verizon.net
                

            	
              Sequoia
                Fossil Fuels Corp.

              PO
                Box 217

              Albany,
                Texas 76430

              Attention:
                Randy Hudson 

              Telephone:
                (325) 762-3991

              Telecopy:
                (325) 762-3992 

              Sequoia7390@sbcglobal.net
                

            


    

    


    Any
      notice delivered in person, by courier service, facsimile or telecopy shall
      be
      deemed given when received by the Party to whom it is addressed. Each Party
      has
      the right to change its address by giving written notice thereof to the other
      Parties. 

    


    3.7
      Governing Law. The laws of the State of Texas shall govern the validity
      of this Agreement, the construction of its terms, and the interpretation of
      the
      rights and duties of the Parties, and the validity construction and
      interpretation of any conveyances executed pursuant to this Agreement, without
      regard to the principles of conflicts of laws, including, but not limited to,
      matters of performance, non-performance, breach, remedies, and procedures.
      Forum
      and venue shall be exclusively in state and federal courts located in Dallas,
      Texas. 

    


    3.8
      Dispute Resolution. In the event of any dispute, litigation or
      arbitration between the Parties hereto with respect to the sale of the Assets,
      the unsuccessful party to such dispute, litigation or arbitration shall pay
      to
      the successful party all costs and expenses, including, without limitation,
      reasonable attorneys' fees, incurred therein by the successful party, all of
      which shall be included in and as a part of the judgment or award rendered
      in
      such dispute, litigation or arbitration. For purposes of this Agreement, the
      term "successful party" shall mean the party which achieves substantially the
      relief sought, whether by judgment, order, settlement or
      otherwise


    
      
        
        

      

      
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    3.9
      Amendment. This Agreement shall not be modified or amended except by an
      instrument in writing and signed by authorized representatives of the Parties.
      All notices and requests hereunder shall be in writing and shall be sent to
      the
      Parties' addresses herein above set forth or to such other address for any
      party
      as may hereafter be designated by such party in writing. 

    


    3.10
      Entire Agreement. The Parties agree and understand that this Agreement
      and all of its exhibits constitute their entire agreement among the Parties
      respecting the subject matter of the transactions contemplated hereby and that
      there are no other agreements among them other than the terms and conditions
      contained herein. 

    


    3.11
      No Third Party Beneficiaries. This Agreement is intended to benefit only
      the Parties hereto and their respective successors and assigns. 

    


    3.12
      Necessary Documents. The Parties further agree to prepare, execute and
      deliver all such other documents that may be reasonably necessary to fully
      effectuate all the terms and conditions herein required. 

    


    THIS
      PURCHASE AGREEMENT is executed by each Party to be in effect upon the Effective
      Date. 

    


    
      	
              SEQUOIA
                FOSSIL FUELS, INC.

            
	 
	
              By:

            	 
	
              Randy
                Hudson

            
	 
	
              CHARLES
                HILL DRILLING, INC.

            
	 	 
	
              By:

            	 
	
              Charles
                Hill, President

            


    

     

    
      
        
        

      

      
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    EXHIBIT
      A:

     

    ASSETS
      TO BE PURCHASED

    


    
      	I.	
              DRILLING
                RIG #1 

            


    

    


    Inventory:

     

    102’
Lee
      C. Moore Derrick 

    T-20
      National Draworks-powered by rebuilt 12V92 Detroit 

    9’
H
      x
      40’ L x 16’ W substructure- 

    150
      ton
      Ideal Blocks – 4 sheave W/B5 Hook 

    Top
      Doghouse w/water tank 

    Roughneck
      Doghouse (bottom) 

    2000
      gal
& 3000 gal diesel tanks 

    5000’
4
      1⁄2” drill pipe 

    16
      drill
      collars 6 1⁄4” 

    150
      KW
      light plant w/ 292 Cummins 

    G
      D FXN
      14” 12V92 

    C-250
      15”
powered by 8V71 Detroit 

    Brewster
      150 ton swivel 

    Kelly
      & Bushings 

    17
1⁄2
      Emsco table 

    2
      Pipe
      Baskets 

    2
      sets
      pipe racks 

    Reagon
      BOP w/new bladder 

    Hydraulic
      hand pump 

    Tongs
      

    Subs
      

    New
      Lights 

    Hand
      Tools 

    Catwalk
      

    Stairways
      

    V-Door
      

    New
      Kelly
      Hose 

    Auto
      Driller – rebuilt 

    Recorder-rebuilt
      

    Straight
      Hole 

    Deviation
      spool w/ new line 

    Jets –
      new hoses 

    Rebuilt
      Air Compressor 

    Mud
      Hopper 

    Two
      (2)
      300 bbl. steel mud pits (optional) 

    HORSEPOWER
      IS 750 


    
      
        
        

      

      
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      	II.	
              DRILLING
                RIG #2 

            


    

     

    Inventory:
      

     

    Lee
      C.
      Moore 102’ Derrick SN #T2702 with 4 sheaves 

    11’
      Substructure 

    (2)
      12V92
      Detroit Engines compounded, SN #12VF0182981237400 & SN 

    #12VF0755281237B00,
      re-manufactured 

    Ideco
      H-40 Draw Works 800 HP w/ new Brakes complete w/air controls, 1” line


    Ideal
      150
      Ton Block/Hook 

    Wheeland
      6200 

    Top
      Doghouse 18’ X 8’ with knowledge box, bench and lockers. 

    Bottom
      Doghouse 20’ X 8’ with lockers, heater and parts bin 

    3000
      Gallon Fuel Tank 

    6
      Pipe
      Racks (3 sets) 

    Catwalk
      45’ X 4’ X 4’ 

    #1
      Pump -
      16V71 Detroit Engine on National 20P Pump w/20” Stroke SN #30056 

    #2
      Pump – Wilson Snyder 14” pump powered by rebuilt 3406 

    175
      KVW
      Light Plant Powered By 671 Detroit Engine (Rebuilt) 

    45’
Kelly
      w/Bushing and Hose 

    Reagan
      BOP w/Manuel Hydraulic Pump unit 

    Geolograph
      Recorder (3264) L-3485 

    Auto
      Drill – SN #5072 

    Loading
      ramp 9’ X 20’ X 5’ 

    Brewster
      17 1⁄2” Rotary Table (Just Rebuilt) 

    Geolograph
      Weight Indicator 

    Tools –
      (2) Tongs, Slips, 4 1⁄2” Elevators, 8’ Bales 

    300
      Barrel Water Tank w/Tool Shed Combination 

    2000
      Gallon Diesel Tank 

    (2)
      Pipe
      Baskets 

    Misc.
      Others 

    Foster
      makeup and breakout catheads 

    450
      HP
      twin disc torque converters 

    Screen
      type shale shaker – new manufactured 

    (14)
      Collars-5 7/8” 4” Full hole w/subs 

     

    NO
      DEVIATION SURVEY TOOLS 

    ONLY
      ONE
      STEEL PIT, BARE NEEDS TO BE REWORKED 

    NO
      DRILL
      PIPE 

    BRAND
      NEW
      STRING OF 6 1⁄2” DRILL COLLARS 


    
      
        
        

      

      
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    EXHIBIT
      B:

    SCHEDULE
      OF LIENS ON THE ASSETS

    


    
      	1.	
              Lien
                numbers 16500005000, 16500005257, & 16500009705 held by First
                Financial Bank, N.A. 

            


    


    
      
        
        

      

      
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